Achieving an Ethical Business Corporation
Knowing and Doing What Is Right
The statement made by the Newsweek article has great relevance to the contemporary business setting. The authors of the article draw a line between the recognition of the legal boundaries and the ability to comply with the current legal regulations. For instance, the leaders of a company may be fully aware of the existing regulations concerning the transparency of financial transactions and the necessity to maintain financial honesty in the firm. However, the risks to which an organization is exposed in the realm of the global economy may compel the leaders of an organization to resort to fraudulent actions as the means of staying afloat and remaining competitive. Therefore, following ethical standards in the global economy setting is quite challenging even if the company leaders are aware of what consequences they will face when doing otherwise (Halbert & Inggulli, 2014).
Reasons for CEO’s Salary Increase
Even though there has always been a significant difference between the salary of a CEO and the one of an average employee or a manager, a steep rise in CEOs’ revenues was witnessed in the 1990s. Nowadays, the salary of a CEO is typically 300 times larger than the one of an average employee. The reasons for the identified phenomenon are linked to economic, financial, and societal factors. First, CEOs are not restrained by any factor that would prevent them from increasing their salaries. The sense of illusory superiority, or the “Lake Wobegon effect” (Francis, Hasan, John, & Wiseman, 2013), is the second reason for CEOs to demand higher wages. Assuming that they have been performing at an excellent level, CEOs appeal for higher pay to the committee, the members of which must either confirm the claim or state that the CEO has been underperforming and, thus, dismiss them. As a result, CEOs’ wages have been rising consistently over the past few years.
Cases Analysis and Discussion
Subject Matter Jurisdiction
The concept of the subject matter jurisdiction is typically defined as the requirement for courts with specific jurisdiction to hear only the cases related to a specific issue. For example, a court for addressing marital issues cannot consider the cases associated with wrongful employment termination. Applied to the case in point, the identified regulation requires admitting that the court has the subject matter jurisdiction to consider the issue in question. According to the 28 U.S. Code § 1332 c.1, “a corporation shall be deemed to be a citizen of every State and foreign state by which it has been incorporated and of the State or foreign state where it has its principal place of business” (28 U.S. Code § 1332 c.1 ). Therefore, while David is not the citizen of Georgia, the company is. Therefore, if it is proven that the defendant was driving the car during his working hours, the firm will be legally liable for David’s actions. In other words, according to the 28 U.S. Code § 1332 c.1, the company will be introduced to the case as one of the parties.
Lawsuits
When addressing the issue of avoiding legal issues for a company or any of its representatives, one must bear in mind that preventing the instances of frivolous lawsuits is nearly impossible due to their unpredictability. However, by following a set of simple rules, one will be capable of avoiding being sued. First and most obvious, the corporate philosophy must incorporate essential ethical principles on which the decision-making process will be based. As a result, a range of dubious steps will be avoided. Furthermore, it will be crucial to research the legislation of the state in which the organization will operate (Weiss, 2014). Thus, the possible legal impediments to the actions of the company members will be avoided successfully. Finally, one must make sure that the needs of all stakeholders are met in the process of carrying out the essential corporate operations. As long as the rights of at last one party are infringed, the threat of a lawsuit will remain tangible and even inevitable. By creating the environment in which internal legal issues (e.g., corporate fraud) are avoided successfully, and external ones (e.g., vexatious lawsuits) are managed accordingly, an organization will strive in the realm of the global economy (Bagley, 2015).
ADR
Addressing the issue of customer dissatisfaction is crucial to avoid legal issues. To manage the problems associated with customer dissatisfaction, one will have to conduct a study by asking clients to fill out a survey. A detailed analysis of the feedback provided by the participants will shed some light on the subject matter.
Afterward, mediation must follow. Unlike arbitration, which is similar to a court hearing because of its formal element, arbitration implies negotiating with the help of a third party. In the case in point, arbitration should be viewed as the possible method of handling the problem. Therefore, it is necessary to include an appropriate clause in the company contract so that the emerging disagreements could be resolved in a manner as efficient and expeditious as possible.
Furthermore, it should be borne in mind that courts may exert a significant influence over the reinforcement of dispute resolution clauses. Therefore, courts may intervene in the implementation of the contract, even though both a company and its customer have the legal right to sign the agreement.
References
Bagley, C. E. (2015). Managers and the legal environment: Strategies for the 21st century. Stamford, CT: Cengage Learning.
Diversity of citizenship; amount in controversy; costs, 28 U.S. Code § 1332 (2006).
Francis, B., Hasan, I., John, K., & Wiseman, M. (2013). Urban agglomeration and CEO compensation. Journal of Financial and Quantitative Analysis, 51(6), 1925-1953. Web.
Halbert, T., & Inggulli, E. (2014). Law and ethics in the business environment. Stamford, CT: Cengage Learning.
Weiss, J. W. (2014). Business ethics: A Stakeholder and issues management approach. San Francisco, CA: Berrett-Koehler Publishers.